BBC
Mortgage rates should fall following the Bank of England’s decision to keep its key interest rate on hold, brokers say.
So far the response has been muted, with the Nationwide the only major lender to reduce mortgage rates since the Bank’s announcement was made.
Brokers expect more competition among lenders in the coming weeks.
But they warn that changes are likely to be slow, with little prospect of the Bank rate being cut in the near future.
The Monetary Policy Committee’s decision to hold the Bank rate at 5.25% was somewhat of a surprise, with many analysts expecting a 15th consecutive increase.
It will bring immediate relief to 1.4 million people on tracker and standard variable rate (SVR) deals who have been seeing regular increases in their monthly repayments.
Even after rates were held, compared with December 2021, those on a tracker mortgage are paying £540 more a month, or £299 more a month on a SVR.
Around three-quarters of mortgage customers hold fixed-rate deals. Banking trade body UK Finance says there are about 800,000 of these deals ending in the second half of 2023, and about 1.6 million expiring next year.
Brokers said there was now a better chance of these borrowers getting mortgage rates of less than 5% when they renew.
“I expect more lenders will lower their fixed mortgage deals over the coming weeks,” said Aaron Strutt, from Trinity Financial. “Mortgage rates need to be closer to 4% to bring more confidence back to the market.
“There certainly is not a full-on price war at the moment, but rates are coming down as the cost of funding mortgages falls.”
The UK’s biggest building society, the Nationwide, reduced rates by up to 0.31 percentage points on Friday.
Other lenders have been nudging down the cost of their new fixed rate mortgages recently, including announcements from TSB before the Bank’s announcement on Thursday and NatWest on Wednesday.
Andrew Montlake, from broker Coreco, said the end of the string of Bank rate rises allowed lenders some “space” to cut their mortgage rates.
“This will be a slow and steady fall rather than anything dramatic and the current plateau looks like it will be a stable place…
